When Insurance Doesn't Cover Property Damage: One Homeowner's Experience
The Shocking Gaps in Coverage: Lessons from a Denied Fire Damage Claim
The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.
A homeowner recently learned the hard way that just because you have insurance doesn't mean you're fully covered when disaster strikes.
In this case, a homeowner's investment property was damaged in a fire - started by the homeowner's son - but the insurance company refused the claim.
The Fire and the Claim
On February 17, 2021, a property owned by a homeowner was set on fire. The homeowner submitted a claim to their insurer, Suncorp. Unfortunately, Suncorp denied the claim, citing a clause in the policy's Product Disclosure Statement (PDS) that specifically excluded coverage for malicious acts and vandalism committed by a resident of the insured address with the policyholder's consent.
In this case, the homeowner's son - who was living in the property at the time - had caused the fire and subsequently pleaded guilty.
The Policy Exclusions
The exclusion the insurer cited is a common one in insurance policies. Policies contain various exclusions that limit coverage, and it's important for policyholders to review these carefully and understand what is and isn't covered.
In this case, the exclusion applied to the son's deliberate act that demonstrated "a reckless disregard for the consequences." The fact that the homeowner didn't consent to the fire was irrelevant because the son was living at the property with the homeowner's consent.
The Insurance Claim Dispute
The homeowner argued that the exclusion shouldn't apply because they didn't consent to their son lighting the fire. However, Australian Financial Complaints Authority (AFCA) disagreed, stating that the exclusion applied to anyone living at the property with the insured's consent. The panel said that it was satisfied that the son had caused the fire and that the exclusion applied.
Notably, while the court refused to record the son's guilty plea due to concerns about his mental health, AFCA said that there was not enough information about his state of mind to overrule the insurer's decision. AFCA added that the complainant could ask Suncorp to reassess its liability once a psychiatric report was provided and the court outcome had been determined.
The Settlement Offer
Following the claim's denial, Suncorp offered the homeowner an ex-gratia payment of $261,318, which the homeowner deemed insufficient for repair costs. The homeowner sought an additional $166,159 or $261,328, based on quotes provided.
However, AFCA noted that Suncorp's offer had been based on an itemised repair quote from an assessment by the insurer's builder, which the panel deemed fair.
Conclusion
Insurance policies can be complex and challenging to navigate, especially when dealing with policy exclusions. In this case, the homeowner's insurance policy didn't cover damages caused by their son, even though the homeowner didn't consent to the fire. Understanding the specifics of your policy - including the exclusions - is critical in knowing precisely what you are and aren't covered for.
Published:Thursday, 25th May 2023 Source: Paige Estritori
Please Note: If this information affects you, seek advice from a licensed professional.
The Australian general insurance industry has reported an after-tax profit of $7.3 billion for the last financial year, marking its strongest performance in over a decade. This significant profit surge is attributed to lower-than-expected catastrophe losses and robust investment returns. However, this financial success has sparked public discourse regarding the fairness of pricing practices and the overall perception of the industry. - read more
The Australian Securities and Investments Commission (ASIC) has identified significant weaknesses in the claims handling practices of several insurers, raising concerns about potential compliance breaches. The regulator's recent review points to deficiencies in the oversight of expert reports and inadequate communication with consumers regarding cash settlement offers. - read more
After achieving a return on equity (ROE) of 19% in the last financial year-the highest in a decade-Australian general insurers are preparing for a moderation in earnings growth. Consultancy firm Finity projects that the industry's ROE will decrease by six percentage points to 13% in the current financial year, aligning with the target range of 10% to 15%. - read more
The Australian Amusement Leisure & Recreation Association (AALARA) has raised concerns over the escalating costs of public liability insurance, which are placing significant pressure on amusement and recreation operators across the country. This warning follows the Insurance Council of Australia's (ICA) recent call for reforms to civil liability laws. - read more
A recent report by the Australian Chamber of Commerce and Industry (ACCI) has revealed that small businesses in Australia are paying up to 30% more for their insurance premiums due to taxes and levies imposed by state and territory governments. This financial burden is leading to a worrying trend where an increasing number of small businesses are either underinsuring or forgoing insurance altogether. - read more
Choosing the right life insurance policy is one of the most important decisions for Australians, especially for those who are middle-aged or older. Life insurance provides financial security for your loved ones in the event of your passing, ensuring that they are not burdened with financial hardships. - read more
Life insurance is a crucial consideration for middle-aged to older Australians. It provides financial security for your loved ones in the unfortunate event of your death. Understanding the various options available is vital to making an informed decision. - read more
When you’re young, life is all about new experiences and making plans for a promising future. While factors like travel, career, and relationships often take centre stage, one aspect often overlooked is life insurance. It might seem like something to consider later in life, but starting a policy while you're young can be a savvy financial move. - read more
As the landscape of finance and personal security evolves in Australia, the importance of being insured has never been more prominent. In a world of changing family dynamics, economic pressures, and higher living costs, life insurance stands as a bastion of support ensuring the well-being of loved ones in the event of unforeseen circumstances. - read more
The horizon of the insurance industry has undergone a transformative shift with the advent of digital technology. With a few clicks, consumers can navigate the once-complex world of insurance policies from the comfort of their home. The digital landscape for insurance services offers unprecedented access to information, comparisons, and instant communication, fostering a more empowered insurance client. - read more
Start Here !
Apply now for your free Insurance assessment and price comparisons!
Knowledgebase
Peril: A specific risk or cause of loss covered by an insurance policy, such as fire, theft, or flood.
